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The name is based on that of a forced induction air compressor which makes a car go faster (a turbocharger).
The turbo button was added to most computers produced after the original 4.77Mhz 8086 was sold. Many software titles (games in particular) used the CPU's frequency for timing, so as faster chips came out, some of these games were unplayable. To provide a layer of compatibility for these titles, the "turbo" button was added. The name itself is an intentional misnomer, as the button doesn't boost the speed, as engaging it slows the system down to a state compatible with original 8086/8088 chips. The turbo button was often linked to a MHz LED display on the system case, or to a "hi"/"lo" LED display. Not all systems offered this feature, but it was very common on systems with 286, 386 and even some 486 and first generation Pentium systems. Soon after the 8086 systems were no longer being produced, software creators used different methods for keeping time within games, making this feature obsolete. 
Some systems also supported keyboard combinations Ctrl-Alt-+ and Ctrl-Alt-- for switching turbo mode on and off; ITT Xtra used Ctrl-Alt-\ to toggle.
While the implementation of the turbo button by manufacturers has disappeared, software developers have compensated with software replacements. One example is DOSBox, which offers full turbo button functionality with adjustable clock speed. Modern PCs that support ACPI power management may provide software controls to switch ACPI performance states or other CPU throttling modes.
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